Nearly twenty years ago, the U.S. Supreme Court held that to be considered a “prevailing” party in a private settlement of a lawsuit, a plaintiff would have to obtain judicial approval, or “imprimatur,” of the settlement. Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep‘t of Health & Human Resources, 532 U.S. 598 (2001). In so holding, the Court rejected application of the “catalyst” test, which requires a plaintiff only to show that his or her lawsuit was a necessary and important factor in causing the defendant to grant a material portion of the plaintiff’s requested relief.

In the instant case, the plaintiffs originally sought approximately $28,000 in regular and overtime wages, plus treble damages and attorney’s fees and costs, under the Massachusetts Wage Act. Following a two-year period of discovery and pretrial motions, the parties mediated the case and agreed to settle for $20,500, leaving the issue of attorney’s fees for the court. Applying the catalyst test, the trial court awarded about $16,000 in fees to the plaintiffs, finding that a recovery in settlement of nearly 70% of the actual damages sought sufficiently satisfied that test so as to render the plaintiffs prevailing parties.

On appeal, the Massachusetts Supreme Judicial Court agreed that the catalyst test was the proper test to be used with respect to the State’s Wage Act, finding that it better promotes the purposes of the Act – creating a powerful disincentive against unlawful conduct and establishing an incentive for plaintiff’s attorneys to undertake cases they might not otherwise deem financially prudent – than does the judicial imprimatur test set forth in Buckhannon. The Supreme Judicial Court added that the catalyst test also promotes prompt settlements, as it removes an incentive to employers to engage in protracted litigation as a tactic, when the amount of actual damages sought might be readily ascertainable and discrete, and prolonging litigation would result in nothing more than additional legal fees. Given that the Wage Act itself includes fee-shifting provisions – “deemed necessary ‘to prevent the unreasonable detention of wages’ by ‘unscrupulous employers,’” the Supreme Judicial Court found no difficulty in concluding that the catalyst test was the appropriate standard under the Wage Act.

If you have any question about this development or any other wage and hour issues, please contact the Jackson Lewis attorney(s) with whom you regularly work.

]]>https://www.wageandhourlawupdate.com/2019/03/articles/states/massachusetts/catalyst-test-applicable-to-awarding-attorneys-fees-for-state-wage-and-hour-claims-massachusetts-supreme-judicial-court-holds/feed/0Massachusetts Law To Prohibit Inquiries Regarding Prior Salary at Interviewhttps://www.wageandhourlawupdate.com/2016/02/articles/states/massachusetts/massachusetts-law-to-prohibit-inquiries-regarding-prior-salary-at-interview/
https://www.wageandhourlawupdate.com/2016/02/articles/states/massachusetts/massachusetts-law-to-prohibit-inquiries-regarding-prior-salary-at-interview/#respondMon, 01 Feb 2016 19:07:09 +0000http://www.wageandhourlawupdate.com/?p=2419Continue Reading]]>In keeping with actions taken by other states, such as California and New York, Massachusetts is poised to pass an updated equal pay law that will greatly expand the ability of individuals to bring claims for violations of equal pay. The proposed law also puts limits on an employer’s effort to seek information about an applicant’s salary history during the interview process. The current proposal recently passed unanimously in the state Senate, and is now before the House of Representatives.

Under the proposed bill, it would be unlawful to:

Prevent employees from inquiring about or discussing their wages with other employees or other individuals;

Require that an applicant for employment disclose prior wages or salary history during the application process; and,

Obtain the salary history of an applicant from a current or former employer, unless the employee provides written authorization to confirm prior wages or salary history after an offer of employment has been made.

Jackson Lewis attorneys will continue to monitor this proposed law and provide updates as necessary.

In Comley, the plaintiff, a Senior Vice President and Managing Director, claimed that the employer’s decision not to award her a bonus under the company’s Management Objective Plan violated the Massachusetts Wage Act because the bonus should have been treated as an earned commission. In response, the employer argued that payment of the bonus was entirely discretionary under the Plan. The Court agreed, relying on language from the Plan guidelines providing that “[t]he availability and terms of [the bonus] are at the sole discretion of Havas Media’s global Board of Directors and can be eliminated or amended at any time,” to find payment of the bonus to be discretionary. As the court observed, “[w]hile the result may seem harsh, discretion is what it is, and if retained by the employer over the award of a bonus, the employee . . . has no resort to the Wage Act.” Because the plaintiff was not entitled to payment under the Wage Act, the court also found that her retaliation claim premised on her objection to being passed over for a bonus also failed.

Business owners should analyze their employees’ compensation structure to ensure compliance with federal and applicable state wage and hour laws, and to maximize discretion over incentive compensation awards where appropriate.

]]>https://www.wageandhourlawupdate.com/2015/06/articles/wage-and-hour/bonuses/massachusetts-federal-court-discretionary-bonus-not-earned-commission-protected-by-massachusetts-minimum-wage-act/feed/0Massachusetts Supreme Court: Real Estate Brokers Not Covered by 2004 Independent Contractor Law Based On Continued Applicability of Real Estate Statutehttps://www.wageandhourlawupdate.com/2015/06/articles/wage-and-hour/coverage/massachusetts-supreme-court-real-estate-brokers-not-covered-by-2004-independent-contractor-law-based-on-continued-applicability-of-real-estate-statute/
https://www.wageandhourlawupdate.com/2015/06/articles/wage-and-hour/coverage/massachusetts-supreme-court-real-estate-brokers-not-covered-by-2004-independent-contractor-law-based-on-continued-applicability-of-real-estate-statute/#respondThu, 04 Jun 2015 16:26:12 +0000http://www.wageandhourlawupdate.com/?p=2272Continue Reading]]>Litigation regarding the status of workers as independent contractors or employees continues to be a hotbed of litigation. This is true even in industries that have long-considered workers as independent contractors, such as real estate agents. Attorneys representing workers, for example, have turned to state statutes addressing independent contractor status to attempt to upset these long-held classifications. The Massachusetts Supreme Judicial Court, however, ruled that the state’s 2004 independent contractor statute cannot be applied to real estate brokers, relying on a longstanding provision of the state’s real estate law authorizing real estate salespersons to operate as contractors. Monell v. Boston Pads, LLC, 2015 Mass. LEXIS 318 (Mass. June 3, 2015).

In Monell, licensed real estate salespeople who worked for, and under, the real estate broker’s license of one of the larger real estate offices in Boston, sued in state court alleging they were misclassified under MA’s strict independent contractor statute, which provides for treble damages. The trial judge, on summary judgment, found for the brokerage, observing that the two statutes (the Real Estate law and the Independent Contractor law) were irreconcilable because, among other issues, the new contractor statute required freedom from control, but the real estate statute expressly permitted an independent contractor arrangement with some degree of supervision and control. Monell v. Boston Pads, LLC, 31 Mass. L. Rep. 382 (Mass. Super. Ct. 2013). Affirming on direct appellate review, the Supreme Court explained “the real estate licensing statute makes it impossible for a real estate salesperson to satisfy the three factors required to achieve independent contractor status, all of which must be satisfied to defeat the presumption of employee status.”

The Court limited its holding to Plaintiffs’ claim under the independent contractor statute, and declined to address Plaintiffs’ claims of misclassification under other provisions of Massachusetts wage law, taking “no position on whether the plaintiffs in fact are employees or independent contractors, or on how, in the absence of the framework established by the independent contractor statute, it may be determined whether a real estate salesperson is properly classified as an independent contractor or employee.” The court observed that legislation seeking to resolve that question had been proposed but rejected by the Governor.

Use of the independent contractor classification continues to draw scrutiny as an aspect of the “fissured” economy federal and state agencies seeks to police. Businesses utilizing contractors must examine their use of contractors for legal compliance.

]]>https://www.wageandhourlawupdate.com/2015/06/articles/wage-and-hour/coverage/massachusetts-supreme-court-real-estate-brokers-not-covered-by-2004-independent-contractor-law-based-on-continued-applicability-of-real-estate-statute/feed/0Massachusetts Highest Court Holds Businesses Not Required to Permit Tipping Under State Lawhttps://www.wageandhourlawupdate.com/2015/04/articles/wage-and-hour/tips/massachusetts-highest-court-holds-businesses-not-required-to-permit-tipping-under-state-law/
https://www.wageandhourlawupdate.com/2015/04/articles/wage-and-hour/tips/massachusetts-highest-court-holds-businesses-not-required-to-permit-tipping-under-state-law/#respondThu, 16 Apr 2015 14:36:31 +0000http://www.wageandhourlawupdate.com/?p=2232Continue Reading]]>In 2013, New York’s highest state court considered which employees are eligible to participate in sharing tips from a communal tip jar, and even if eligible, whether the employer could nonetheless exclude them from participating. The New York court held an employer may exclude employees from sharing in tips even if they would otherwise be eligible to do so (though noted there might be some limit if only the highest ranking employees were included). Now, considering a related question, the Massachusetts Supreme Judicial Court has ruled that a Dunkin Donuts franchisee may prohibit tipping altogether without violating state law. Meshna v. Scrivanos, 2015 Mass. LEXIS 161 (Mass. Apr. 10, 2015).

In Scrivanos, the franchisee communicated to customers that tipping was not permitted through various measures including placing signs in the stores stating “no tipping” or “thank you for not tipping,” and instructing employees to communicate the policy to inquiring customers. Plaintiffs, whom the court agreed were “wait staff” within the meaning of Massachusetts’ Tips Act, argued that under the Act, a no-tipping policy was tantamount to “retaining” or “deducting” from tips “given” to the workers. The court, accepting direct appellate review from the trial court and skipping intermediate appeals, found that nothing in the Tips Act prohibits an employer from forbidding tips in the first instance, and that the Act only regulated tips given to employees under a policy permitting tipping. Because the employer had taken proper affirmative steps to notify patrons of the policy, the court also concluded the business did not violate the Act by retaining monies left in contravention of the policy.

“This is a welcome decision for Massachusetts employers, particularly given the state’s otherwise fairly restrictive rule concerning the disposition or splitting of tips where tips are permitted,” observed Jackson Lewis Boston Office Counsel Brian Lewis. “More broadly, the opinion demonstrates the importance of being able to establish that an employer has communicated its policy, whatever that policy may be.”

Massachusetts, like New York and many other states, continues to regulate tipping practices through its labor law provisions. Employers must examine their own tipping policies and practices under all applicable state laws.

]]>https://www.wageandhourlawupdate.com/2015/04/articles/wage-and-hour/tips/massachusetts-highest-court-holds-businesses-not-required-to-permit-tipping-under-state-law/feed/0Massachusetts Supreme Court Permits Common Law Claims for Alleged Unpaid Wageshttps://www.wageandhourlawupdate.com/2013/09/articles/states/massachusetts/massachusetts-supreme-court-permits-common-law-claims-for-alleged-unpaid-wages/
https://www.wageandhourlawupdate.com/2013/09/articles/states/massachusetts/massachusetts-supreme-court-permits-common-law-claims-for-alleged-unpaid-wages/#respondTue, 10 Sep 2013 14:41:27 +0000http://wagehourlaw.wp.lexblogs.com/2013/09/massachusetts-supreme-court-permits-common-law-claims-for-alleged-unpaid-wages/Continue Reading]]>Rejecting a legal theory widely accepted in many jurisdictions, namely that statutory wage-and-hour laws are intended to preempt claims for alleged unpaid compensation brought pursuant to older, less-specific common law theories, the Massachusetts Supreme Court ruled last month that an employee whose wage claims may well be time barred under the Massachusetts Wage Act can seek to recover such wages through common law claims. Lipsitt v. Plaud, 2013 Mass. LEXIS 694 (Mass. Aug. 12, 2013).

In Plaud, the museum director plaintiff brought suit to recover salary arrearages under the Wage Act, as well as under breach of contract and quantum meruit (quasi-contract) theories. Acknowledging that the claims under the Wage Act’s three-year limitations period likely were time-barred, Plaintiff withdrew those claims and appealed the district court’s ruling that his contractual claims were preempted. The Supreme Court, required to determine whether the “necessary implication” of the enactment of the Wage Act was preemption of common law rights, observed that the continued availability of common law remedies did not frustrate or negatively impact enforcement of the Wage Act. The Court stated that “The fact that, in cases like the present one, an employer whose Wage Act liability for treble damages and attorney’s fees has been extinguished will nonetheless be exposed to simple contract liability for an additional three-year period [under contract law] is consistent with both the public policy objectives underlying the Wage Act and the status of an employment agreement as a contract like any other.”

This ruling contradicts, in part, rulings of federal courts in numerous jurisdictions that the Fair Labor Standards Act and any additional state wage-and-hour laws preempt claims for compensation on unjust enrichment, quantum meruit or other common law equitable theory. See, e.g., Clougher v. Home Depot U.S.A., Inc., 696 F. Supp. 2d 285, 295 (E.D.N.Y. 2010)(“This Court dismisses Clougher’s equitable claims for quantum meruit and unjust enrichment as duplicative of his statutory claim. As his New York Labor Law claim provides an adequate legal remedy for the conduct alleged, his equitable claims are hereby dismissed”).

As we recently noted, the Massachusetts Supreme Court has issued a series of rulings, all with the same message: employee protections in the area of wages and compensation under Massachusetts law are robust, and ambiguities in the law may well be construed to favor workers when disputes arise. Massachusetts employers must carefully craft compensation policies to comply with the law and avoid disputes.

In Taylor, the Court considered claims of independent contractor misclassification filed by New York-based couriers for a Massachusetts corporation pursuant to Mass. Gen. Laws ch. 149, § 148B. The couriers in question lived and worked only in New York. However, their independent contractor agreements contained a Massachusetts choice of law provision and a Massachusetts forum selection clause. Plaintiffs filed a purported class action lawsuit in Massachusetts claiming that they were misclassified as independent contractors within the meaning of G.L. c. 149 §148B. The case was dismissed by the Superior Court, based on its conclusion that the Massachusetts independent contractor statute did not apply to non-resident workers performing services only outside of Massachusetts because they could not be reclassified as employees under that statute and would not have viable claims under the Massachusetts Wage Act. Because there is no express territorial limit contained in the MA wage statutes, and because application of Massachusetts law to the New York-based couriers would not be “contrary to a fundamental policy of a state [that] has a materially greater interest than the chosen state in the determination of the particular issue” (i.e. New York), the Supreme Judicial Court reversed the dismissal by the Superior Court.. The SJC further concluded that the workers would be able to assert claims under the Massachusetts wage payment, overtime and minimum wage statutes. Also seeDow v. Casale, 83 Mass. App. Ct. 751 (Mass. App. Ct. 2013)(Florida-based worker could bring claim for commissions and unreimbursed business expenses under MA wage law based on minimum contacts with MA).

In Cook, the court addressed whether and when an individual could be held liable as an “employer” under the Massachusetts Wage Act (a decision the Court of Appeals for the Second Circuit recently declined to answer for purposes of the New York Labor Law). The SJC made clear in Cook that managers of limited liability companies (LLCs) can be held individually liable for violations of the Massachusetts payment of wages act, including the imposition of mandatory treble damages and attorneys’ fees. Historically, the Wage Act had been interpreted to impose individual liability only to officers of corporations.

Plaintiffs in Cook brought claims against two managers of the defendant LLC for failure to pay wages. The Superior Court dismissed plaintiffs’ claims, based on its conclusion that the Wage Act “does not by its plain language, impose liability on the managers of an LLC.”

The SJC reversed the Superior Court’s order dismissing the case. It recognized that the legislative intent of the Wage Act was to make employers liable and to hold individual managers responsible as employers, irrespective of the form of the business entity. Although the SJC acknowledged that the Wage Act does not by its plain language impose liability on managers of LLCs, the LLC did not exist as a business form at the time the Wage Act was amended to provide for individual liability. Therefore, individual liability can be imposed where a “"person having employees in his service . . . controls, directs, and participates to a substantial degree in formulating and determining [wage] policy.”

In light of these expansive decisions by the SJC, Jackson Lewis partner and wage-and-hour practitioner Guy Tully observes that “Employers based in Massachusetts or with operations in Massachusetts which have not examined wage-and-hour coverage and liability issues must take immediate steps to do so. For those Massachusetts based companies utilizing the services of independent contractors outside of Massachusetts, it is important to carefully review the choice of law and forum selection clauses in those agreements to help eliminate the inadvertent application of Massachusetts law to those relationships.”

Massachusetts – like New York, Illinois, California and other populous states – has a robust state wage enforcement scheme which employers disregard at their own peril. Businesses operating in and/or out of the state of Massachusetts must regularly review their wage-and-hour practices for compliance with federal and state law.

In Matamoros, the First Circuit confronted the issue of whether a shift supervisor was a proper tip pool participant under the novel language of the Massachusetts’ Tips Act, Mass. Gen. Laws ch. 149, § 152A, which limits tip pool participation to individuals employed as “a waiter, waitress, bus person, and counter staff, who: (1) serves beverages or prepared food directly to patrons, or who clears patrons’ tables; (2) works in a restaurant, banquet facility, or other place where prepared food or beverages are served; and (3) who has no managerial responsibility.” Observing that this conjunctive test required Starbucks to meet all three prongs, the court focused on the last prong, whether shift supervisors possessed any “managerial responsibility.” Applying this literal Massachusetts-specific statutory definition without reference to legislative history or other extrinsic materials, the court concluded that the Tips Act “says what it means and means what it says” and, because the shift supervisors directed the work of others, the ruling that they should not have participated in the tip pool was correct.

Matamoros poses concerns for hospitality employers in Massachusetts, where it has now been clarified that tip pool participation is greatly constrained by the language of the Tips Act. While it is possible Starbucks will seek review of this decision from the United States Supreme Court, review of this state law issue does not seem likely. All Massachusetts hospitality employers should review their tip practices in response to this decision.

]]>https://www.wageandhourlawupdate.com/2012/11/articles/wage-and-hour/tips/starbucks-tip-jar-wars-rage-on-first-circuit-excludes-shift-supervisors-from-massachusetts-tip-jars/feed/0Massachusetts Federal Judge Issues Decision Expansively Interpreting FLSA’s Minimum Wage Obligationshttps://www.wageandhourlawupdate.com/2011/10/articles/minimum-wage/massachusetts-federal-judge-issues-decision-expansively-interpreting-flsas-minimum-wage-obligations/
https://www.wageandhourlawupdate.com/2011/10/articles/minimum-wage/massachusetts-federal-judge-issues-decision-expansively-interpreting-flsas-minimum-wage-obligations/#respondFri, 07 Oct 2011 18:01:02 +0000http://wagehourlaw.wp.lexblogs.com/2011/10/massachusetts-federal-judge-issues-decision-expansively-interpreting-flsas-minimum-wage-obligations/Continue Reading]]>As we have discussed, federal courts generally interpret the FLSA in conformity with longstanding FLSA principles stated in, among other seminal cases, United States v. Klinghoffer Bros. Realty Corp., 285 F.2d 487 (2d Cir. 1960). Under the Klinghoffer rule, the FLSA generally just mandates: 1) the payment of overtime at the regular rate for hours in excess of 40; and, 2) that employees receive en toto at least minimum wage for all hours of work in a workweek. Thus, an employee who is paid for 35 hours at a rate above the minimum wage, and then later alleges that he or she worked 36 hours, has a claim under the FLSA only if inclusion of that additional hour pushes his or her regular rate for the 36 compensable hours below the minimum wage (currently $7.25/hour). A new decision calls this longstanding rule into question. Norceide v. Cambridge Health Alliance, 2011 U.S. Dist. LEXIS 103686 (D. Mass. Aug. 28, 2011).

In reviewing Defendant’s motion to dismiss a non-overtime off-the-clock claim under Klinghoffer, Judge Nancy Gertner observed that the courts following the Klinghoffer rule have “mostly done so by citing to Klinghoffer without any further analysis of whether, in fact, the weekly average rule effectuates the legislative intent of the FLSA’s minimum wage law.” Id. at * 12. Observing that the First Circuit (encompassing Massachusetts) has not had cause to rule on the issue, the judge concluded that “the plain language of the minimum wage provision, the remaining parts of the FLSA, and the Congress’ primary goal of protecting workers buttresses the conclusion that Congress intended for the hour-by-hour method to be used for determining a minimum wage violation.” Id. at * 19.

While many state laws already provide employee protection for gap time by requiring an agreed upon rate to be paid for all hours worked, Norceide is an adverse decision for all employers, particularly those with operations in jurisdictions regulated predominately or exclusively by the FLSA, and those within the First Circuit (Massachusetts, Rhode Island, New Hampshire, Maine and Puerto Rico). Such employers are not only liable for gap time claims but also the additional 100% liquidated damages available under the FLSA. Proper tracking of hours worked remains of paramount importance for all employers.

]]>https://www.wageandhourlawupdate.com/2011/10/articles/minimum-wage/massachusetts-federal-judge-issues-decision-expansively-interpreting-flsas-minimum-wage-obligations/feed/0Massachusetts High Court Rules Treble Damages Provision Not Retroactivehttps://www.wageandhourlawupdate.com/2011/09/articles/states/massachusetts/massachusetts-high-court-rules-treble-damages-provision-not-retroactive/
https://www.wageandhourlawupdate.com/2011/09/articles/states/massachusetts/massachusetts-high-court-rules-treble-damages-provision-not-retroactive/#respondTue, 06 Sep 2011 14:19:52 +0000http://wagehourlaw.wp.lexblogs.com/2011/09/massachusetts-high-court-rules-treble-damages-provision-not-retroactive/Continue Reading]]>While it is generally understood that decisions of courts apply retroactively (as interpretations of the law) while newly enacted statutes do not (as pronouncements of new law) unless expressly provided by the statutory language, challenges to these principles often arise, especially when the decision or enactment modifies recoverable damages. In a victory for employers, Massachusetts’ highest court ruled last week that the 2008 legislation which created a “treble damages” remedy for violations of the Massachusetts Wage Act applies only to violations which occurred after the statute’s enactment date of July 12, 2008. Rosnov v. Molloy, 2011 Mass. LEXIS 735 (Mass. Aug. 31, 2011). This decision is in accord with a prior federal court decision. DiFiore v. Am. Airlines, Inc., 688 F. Supp. 2d 15 (D. Mass. 2009).

Rosnov concerned an attorney who worked for a separate law office and, after leaving that office, was able to prove at trial that she was entitled to a commission for a referral based on an oral contract. Following the jury’s verdict, plaintiff argued to the trial court that the treble damages provision should apply even though her claim was brought in 2007 and related to events occurring in an earlier time period. The trial court agreed, and awarded treble damages. In analyzing the case under the traditional rule regarding retroactivity, the Supreme Judicial Court of Massachusetts observed that “the distinction between legislation that concerns ‘substantive rights,’ and legislation that concerns ‘procedures’ and ‘remedies,’ has proved to be difficult to draw.” Nevertheless, the court ruled that “Absent an express legislative directive to the contrary . . . the mandatory treble damages . . . should not be retroactively applied.” Finding no such express directive, the court held that the provision did not apply to claims accruing before the enactment date of July 12, 2008.

While this ruling is favorable to employers, and hopefully will inform courts analyzing retroactivity of damages provisions under other statutes, such as New York’s Wage Theft Prevention Act (and the decisions to date have indicated the statute does not apply retroactively), the harsh reality in Massachusetts is that the treble damages provision remains applicable for wage claims accruing after July 2008, creating significant potential liabilities.